7/27/2010 Deferred Compensation Program Presentation LEOFF Plan 2 Retirement Board July 28, 2010 Brian Berghoff, DCP Administrator Department of Retirement Systems – WASHINGTON STATE – Deferred Compensation Program What is the Washington State Deferred Compensation Program? • An IRS 457(b) supplemental retirement savings investment plan – Similar to a 401(k), Private Sector – Similar to a 403(b), Non-Profit • Offered by Washington State – DRS administers DCP – WSIB selects and monitors investment options 1
7/27/2010 What is the Washington State Deferred Compensation Program? • Available to Public Employees of: – State Agencies – Higher Education Institutions – Political Sub Divisions if employer has signed resolution adopting DCP What is the Washington State Deferred Compensation Program? • Voluntary Program • Reduces current taxable income • Account savings grow on a tax-deferred basis • DCP fees are typically lower than other plans • We do not offer loans - some plans do – Hardship withdrawals are available Deferred Compensation Program • 1,317 retirement system employers • 1,017 DCP participating employers • Over 53,000 participants • Over $2.6 billion in assets – As of June 30, 2010 2
7/27/2010 LEOFF Plan 2 374 LEOFF Plan 2 Employers – 16,887 employees • 144 Fire Protection Districts • 39 Counties • 177 Cities and Towns • 14 Other LEOFF Plan 2 – Active DCP Employers 227 LEOFF Plan 2 DCP Employers - 5,462 employees • 85 Fire Protection Districts • 22 Counties • 110 Cities and Towns • 10 Other LEOFF Plan 2 – Fire Protection Districts 144 Fire Protection Districts - 3,563 total employees • FPDs in DCP – 85 – 2,075 employees – 907 participants – 44% • FPDs not participating in DCP – 59 – 1,488 employees 3
7/27/2010 LEOFF Plan 2 – Counties 39 Counties – 2,831 total employees • Counties in DCP – 22 – 662 employees – 76 participants – 11% • Non-DCP counties – 17 – 2,169 employees LEOFF Plan 2 – Cities and Towns 177 Cities/Towns – 10,052, total employees • Cities/Towns in DCP – 110 – 2,494 employees – 617 participants – 25% • Non-DCP Counties – 67 – 7,558 employees LEOFF Plan 2 – Miscellaneous 14 Miscellaneous – 441, total employees • In DCP – 10 – 231 employees – 103 participants – 45% • Non-DCP – 4 – 210 employees 4
7/27/2010 LEOFF Plan 2 and DCP – Statistics Total LEOFF 2 employers – 374 • 61% have joined DCP: 227 • 39% do not participate in DCP: 147 Total LEOFF 2 employees – 16,887 • 32% - DCP participants – 5,462 • 68% - Not in DCP – 11,425 Maximum Deferral - 2010 • Regular annual deferral $16,500 - Monthly deferral $ 1,375 • 50+ annual catch-up $22,000 - Monthly deferral $ 1,833 • 3-year catch-up provision $33,000 - From normal retirement It’s Smart! Employees • Defer Federal Income Tax • Tax-deferred growth • Dollar cost averaging • Low Administrative Fee .14% – No sales commissions – No transaction fees 5
7/27/2010 It’s Smart! Employees • No Penalties for Early Withdrawals – No 10% penalty if younger than 59 ½ • Washington State Investment Board – Selects investment options – Monitors fund managers It’s Easy! Employees • Simple enrollment process • Automatic payroll deduction • You decide how much – Minimum contribution $30 per month – Maximum contribution $16,500 per year • Change your deferral amount any time Employee/Participant Resources 6
7/27/2010 Employee Resources It’s Smart! Employers • Employee benefit package – Take advantage of this program – Positive effect on recruitment and retention • Administration – No direct costs – Reporting method used for LEOFF can be used for DCP • Employer match It’s Easy! Employers • Washington State Investment Board – Selects investment options – Monitors fund managers • Can contact DRS for support when necessary – Training, Education and to Increase Awareness – Reporting questions – Supplies such as Publications 7
7/27/2010 Employer Resources Education and Outreach Our goal - “Increase awareness and knowledge in support of better retirement planning.” • The E&O team travels across the state to: – Increase awareness of retirement benefits – To promote retirement education for employers and their employees Education and Outreach • On-site presentations – DCP – Retirement • On-site one-on-one appointments – Employees – Employers • New Employee Orientation • Benefit fairs 8
7/27/2010 Education and Outreach • Host retirement seminars around the state specially designed for members who are within five years of retirement. These informational seminars cover: – Social Security – VEBA – PEBB Health Insurance – Retirement system benefits – DCP Education and Outreach Employer • Learn how the Education and Outreach team can help employers and their employees – Schedule a presentation – new employee orientation – one-on-one appointments Contact the Education and Outreach team at: 360-664-7000 ext 47115 or 800-547-6657 ext 47115 Investment Options • Two different approaches to investing – One-Step Investing – Build and Monitor • Ten fund options to choose from – 9 fund choices – 12 Retirement Strategy Funds 9
7/27/2010 Investment Options • One Step Investing - Retirement Strategy Funds – Diversification – Automatic rebalancing – Adjusts your asset mix as you move toward your target date Investment Options – Retirement Strategy Investment Options – Build and Monitor • Build and Monitor – A full spectrum of investment choices for people who want to take a more hands-on approach with their portfolio 10
7/27/2010 Investment Options – Build and Monitor • The Savings Pool Less potential risk / return • Washington State Bond Fund • Washington State Social Balanced Fund • Active US Value Stock Fund • U.S. Stock Market Index Fund • Active US Core Stock Fund • Fidelity Growth Company Fund • U.S. Small Stock Index Fund More potential • International Stock Fund risk / return Distribution Options • Separate from Service or Retirement – Lump sum – Installments – Partial lump sum & installments – Annuity purchase – Rollovers – Death – balance to beneficiaries – No IRS early withdrawal penalties Discover The Smart, Easy Way to Save 11
7/27/2010 Contact DCP Participant Call the DCP Information Line 1-888-327-5596 Press 1 to verify balance and manage your account Press 2 with enrollment & distribution questions Online access at: www.drs.wa.gov/dcp Thank you 12
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